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Daily Pivots: (S1) 1.3650; (P) 1.3689; (R1) 1.3711; More...

Intraday bias in USD/CAD remains neutral at this point. Considering bullish convergence condition in 4H MACD, firm break of 1.3741 will indicate short term bottoming at 1.3633. Intraday bias will turn back to the upside for stronger rebound to 1.4014 resistance, as a correction to fall from 1.4791. Nevertheless, decisive break of 61.8% projection of 1.4414 to 1.3749 from 1.4014 at 1.3603 will pave the way to 100% projection at 1.3349.

In the bigger picture, price actions from 1.4791 medium term top could either be a correction to rise from 1.2005 (2021 low), or trend reversal. In either case, further decline is expected as long as 1.4014 resistance holds. Firm break of 38.2% retracement of 1.2005 (2021 low) to 1.4791 at 1.3727 will pave the way back to 61.8% retracement at 1.3069.

Asian equities edged modestly higher on Wednesday, lifted by the announcement that US and Chinese officials reached a “framework” to implement the Geneva trade consensus and advance commitments made in the latest Trump-Xi phone call. While officials from both sides struck an optimistic tone, the agreement remains preliminary, lacking substantive details on thornier issues.

US Commerce Secretary Howard Lutnick confirmed that the deal would still require presidential approval on both sides before moving forward. One of the key elements of the framework involves China’s rare-earth exports, a pivotal issue as the US seeks to stabilize supply chains. Lutnick said the US expects export restrictions to be eased, with reciprocal rollback of recent US technology export bans to China.

However, the broader market reaction was muted. The US Court of Appeals allowed Trump’s contested tariffs to remain in place pending further legal review, undermining hopes of swift tariff rollback. The ruling enables the continued enforcement of “Liberation Day” tariffs, which apply to imports from major partners. This legal backdrop, coupled with still-fragile diplomatic progress, reinforces the market’s caution.

In the currency markets, the overall tone is mixed, with Swiss Franc and Dollar leading as the day’s strongest performers so far, followed by Loonie. On the other end, risk-sensitive currencies Kiwi and Aussie are softer, alongside Sterling. Euro and Yen are positioning in the middle of the pack. Despite modest equity gains, this is far from a full-fledged risk-on environment.

Attention now shifts to two major US events: US CPI report and 10-year Treasury note auction. The inflation data will serve as a critical barometer for how much of the tariff impact is bleeding into consumer prices. Simultaneously, the Treasury auction will test investor appetite for government debt amid lingering concerns over deficits, erratic trade policies, and rising issuance needs.

In Asia, at the time of writing, Nikkei is up 0.50%. Hong Kong HSI is up 0.92%. China Shanghai SSE is up 0.55%. Singapore Strait Times is down -0.51%. Japan 10-year JGB yield is down -0.017 at 1.463. Overnight, DOW rose 0.25%. S&P 500 rose 0.55%. NASDAQ rose 0.63%. 10-year yield fell -0.008 to 4.474.

Inflation data and treasury auction pose twin tests for US Bond Market

Two major events in the US are closely watched today. The May CPI report and the USD 39B 10-year Treasury auction converge to test sentiment in the bond market.

The May CPI will offer the clearest signal yet of whether tariffs are beginning to filter through to consumer prices. Economists expect a 0.2% mom gain, with annual headline inflation accelerating to 2.5%. Core CPI, is projected to rise 0.3% mom and accelerate to 2.9% yoy.

While today’s CPI reading will provide an initial glimpse, the real acceleration in prices may come in June as tariffs ripple through supply chains. The unpredictability of Trump’s trade strategy, frequent shifts between escalation and truce, could delay the impact but increasing its persistence. Fed’s challenge is not only identifying if inflation is returning, but determining whether it’s sticky enough to warrant policy action beyond holding rates steady.

Meanwhile, the 10-year Treasury auction will act as a referendum on fiscal credibility. With swelling deficits, an uncertain trade outlook, and ballooning spending commitments—including the administration’s touted “big, beautiful” infrastructure and defense budgets—investors will be watching bid-to-cover ratios and indirect bidder participation for signs of strain. A weak auction could rekindle fears of waning demand for US debt, driving yields higher and possibly stoking volatility across asset classes.

Technically, the 10-year yield has remained within a broad range since peaking at 4.997 in 2023. While it spiked to 4.629% in May following Moody’s downgrade of the US credit rating, the move was limited and quickly retraced. As long as the 4.809 resistance level caps upside attempts, the bond market appears relatively calm—though not immune to future shocks.

Japan’s CGPI cools to 3.2% in May, but food inflation continue to rise

Japan’s corporate goods price index slowed more than expected in May, easing from 4.1% to 3.2% yoy, versus the anticipated 3.5% yoy. The decline reflects the broader disinflationary trend in upstream prices, aided by the recent rebound in Yen. Yen-based import price index plunged -10.3% yoy, a sharper drop than April’s -7.3% yoy.

Falling raw material costs were evident across sectors, with steel prices down -4.8% yoy, chemicals -3.1% yoy, and non-ferrous metals -2.1% yoy

However, consumer-related categories showed more persistence in inflation. Prices of food and beverages accelerated to 4.2% yoy from April’s 4.0% yoy, suggesting that inflationary stickiness in essential goods remains a challenge despite broader producer-side cooling.

USD/CAD Daily Outlook

Daily Pivots: (S1) 1.3650; (P) 1.3689; (R1) 1.3711; More...

Intraday bias in USD/CAD remains neutral at this point. Considering bullish convergence condition in 4H MACD, firm break of 1.3741 will indicate short term bottoming at 1.3633. Intraday bias will turn back to the upside for stronger rebound to 1.4014 resistance, as a correction to fall from 1.4791. Nevertheless, decisive break of 61.8% projection of 1.4414 to 1.3749 from 1.4014 at 1.3603 will pave the way to 100% projection at 1.3349.

In the bigger picture, price actions from 1.4791 medium term top could either be a correction to rise from 1.2005 (2021 low), or trend reversal. In either case, further decline is expected as long as 1.4014 resistance holds. Firm break of 38.2% retracement of 1.2005 (2021 low) to 1.4791 at 1.3727 will pave the way back to 61.8% retracement at 1.3069.

Since reaching its low on April 7, 2025, Dow Futures (YM) has shown signs of recovery. The Index has initiated a rally that requires further development to confirm whether the April 7 low will hold as a significant bottom. To establish this, the Index needs to either achieve a new all-time high or complete a clear five-wave structure from the April 7 low. Either of these developments would significantly reduce the probability of the Index undergoing a larger double correction. Currently, the rally from the April 7 low is in progress and appears to be forming an impulsive structure. An impulse is typically a strong bullish signal in technical analysis.

From the April 7 low, the rally has unfolded as follows: wave 1 peaked at 39,427. A corrective wave 2 then followed which ended at 36,882. The ongoing wave 3 is subdividing into a smaller-degree impulse, indicating continued upward momentum. Within wave 3, wave ((i)) concluded at 41,140, and the subsequent pullback in wave ((ii)) ended at 37,998. The advance in wave ((iii)) reached 42,976, with the corrective wave ((iv)) bottoming at 41,236. Currently, wave ((v)) is forming as an ending diagonal, a pattern often signaling the final stage of a move. As long as the Index remains above 41,238, expect one more push higher to complete wave ((v)), which should also finalize wave 3 in the higher degree. Following this, the Index is anticipated to experience a larger-degree wave 4 pullback, likely unfolding in a 3, 7, or 11-swing corrective pattern, before resuming its upward trajectory.

Dow Futures (YM) 60-Minute Elliott Wave Technical Chart

YM Elliott Wave Technical Video

https://www.youtube.com/watch?v=q0bZe3mZoSA

Two major events in the US are closely watched today. The May CPI report and the USD 39B 10-year Treasury auction converge to test sentiment in the bond market.

The May consumer price index (CPI) will offer the clearest signal yet of whether tariffs are beginning to filter through to consumer prices. Economists expect a 0.2% mom gain, with annual headline inflation accelerating to 2.5%. Core CPI, is projected to rise 0.3% mom and accelerate to 2.9% yoy.

While today’s CPI reading will provide an initial glimpse, the real acceleration in prices may come in June as tariffs ripple through supply chains. The unpredictability of Trump’s trade strategy, frequent shifts between escalation and truce, could delay the impact but increasing its persistence. Fed’s challenge is not only identifying if inflation is returning, but determining whether it’s sticky enough to warrant policy action beyond holding rates steady.

Meanwhile, the 10-year Treasury auction will act as a referendum on fiscal credibility. With swelling deficits, an uncertain trade outlook, and ballooning spending commitments—including the administration’s touted “big, beautiful” infrastructure and defense budgets—investors will be watching bid-to-cover ratios and indirect bidder participation for signs of strain. A weak auction could rekindle fears of waning demand for US debt, driving yields higher and possibly stoking volatility across asset classes.

Technically, the 10-year yield has remained within a broad range since peaking at 4.997 in 2023. While it spiked to 4.629% in May following Moody’s downgrade of the US credit rating, the move was limited and quickly retraced. As long as the 4.809 resistance level caps upside attempts, the bond market appears relatively calm—though not immune to future shocks.

Japan’s corporate goods price index slowed more than expected in May, easing from 4.1% to 3.2% yoy, versus the anticipated 3.5% yoy. The decline reflects the broader disinflationary trend in upstream prices, aided by the recent rebound in Yen. Yen-based import price index plunged -10.3% yoy, a sharper drop than April’s -7.3% yoy.

Falling raw material costs were evident across sectors, with steel prices down -4.8% yoy, chemicals -3.1% yoy, and non-ferrous metals -2.1% yoy

However, consumer-related categories showed more persistence in inflation. Prices of food and beverages accelerated to 4.2% yoy from April’s 4.0% yoy, suggesting that inflationary stickiness in essential goods remains a challenge despite broader producer-side cooling.

Key Highlights

Bitcoin started a fresh increase above the $107,000 resistance.

• BTC/USD cleared a major bearish trend line with resistance at $106,250 on the 4-hour chart.
• Ethereum is showing positive signs above the $2,600 level.
• XRP price is consolidating and facing hurdles near $2.350.

Bitcoin Price Technical Analysis

Bitcoin price started a fresh increase above the $102,000 zone against the US Dollar. BTC was able to surpass the $105,000 and $106,000 resistance levels.

Looking at the 4-hour chart, the price settled above the $105,000 level, the 100 simple moving average (red, 4-hour), and the 200 simple moving average (green, 4-hour). It even cleared a major bearish trend line with resistance at $106,250.

A high was formed at $110,651 and the price is now consolidating gains. Immediate support is near the $108,000 level. The next key support sits at $106,750 or the 38.2% Fib retracement level of the upward move from the $100,365 swing low to the $110,651 high.

A downside break below $106,750 might send Bitcoin toward the $105,500 support. Any more losses might send the price toward the $104,200 support zone.

On the upside, the price could face resistance near the $110,500 level. The next key resistance is $111,900. The main resistance could be $112,500. A successful close above $112,500 might start another steady increase.

In the stated case, the price may perhaps rise toward the $115,000 level. Any more gains might call for a test of $120,000.

Looking at Ethereum, the bulls seem to be in control, and they were able to push the price above the $2,620 resistance zone.

Today’s Economic Releases

• US Consumer Price Index for May 2025 (MoM) – Forecast +0.2%, versus +0.2% previous.
• US Consumer Price Index for May 2025 (YoY) – Forecast +2.5%, versus +2.3% previous.
• US Consumer Price Index Ex Food & Energy for May 2025 (YoY) – Forecast +2.9%, versus +2.8% previous.

Natural Gas: ⬇️ Sell

• Natural Gas reversed from key resistance level 3.80
•  Likely to fall to support level 3.50

Natural Gas recently reversed down from the pivotal resistance level 3.80 (which is the upper border of the narrow sideways price range inside which the price has been trading from May).

The downward reversal from the resistance level 3.80 created the daily Japanese candlesticks reversal pattern Bearish Engulfing.

Given the strong daily downtrend, Natural Gas can be expected to fall to the next support level 3.50 (lower border of the active price range, low of waves (2) and 2).

Brent crude oil: ⬇️ Sell

• Brent crude oil reversed from key resistance level 67.80
• Likely to fall to support level 64.60.

Brent crude oil recently reversed down from the resistance area between the key resistance level 67.80 (which stopped wave (2) in the middle of April), upper daily Bollinger Band and the 61.8% Fibonacci correction of the downward impulse from January.

The downward reversal from this resistance area stopped the previous short-term ABC correction 2 from the start of May.

Given the strong daily downtrend, Brent crude oil can be expected to fall to the next support level 64.60.

Markets

Trade talks between the US and China entered their second day in London. The presence of US Treasury Secretary Bessent, commerce secretary Lutnick, trade representative Greer and Chinese Vice Premier He Lifeng and commerce minister Wang Wentao underscores the importance of that gathering one week after US President Trump and Chinese President Xi Jinping spoke a first time on the phone. Comments by Bessent “good meeting” and Lutnick “fruitful discussions” aren’t sufficient to lift market sentiment like for example in the wake of Geneva talks which led to the US and China dropping high tariff walls for 90 days. Topic of debate is (amongst others) dropping US export curbs on some tech exports in exchange for assurances on easing limits on Chinese rare earth shipments. An announcement, positive or negative, can be expected within the next couple of hours and might shift markets in a significant manner.

Awaiting the trade talk outcome, the eco calendar offered little inspiration to guide trading. ECB governors speak with one voice in saying that policy and inflation are now in a favorable zone, allowing for a wait-and-see approach. This obviously doesn’t mean that the ECB would sit back and watch when economic developments take a turn for the worse or should upside inflation risks materialize. Dovish ECB member Villeroy today suggested that the ECB managed to successfully normalize monetary policy. The EMU agenda remains light throughout the week while US CPI inflation (tomorrow) and June University of Michigan consumer confidence (Friday) hand the Fed some final input for deciding on policy next week. It’s obvious that for now, the US central bank will continue to err on the side of upside inflation risks rather than already hinting at a stronger focus on downside employment risks. Core bonds are slightly better bid today after the end of last week sell-off in Europe (ECB) and the US (payrolls). Core curves bull flatten with yield changes in Germany and the US ranging between -1 bp at the front end and -4 bps at the very long end. Fortunes for the dollar haven’t improved yet with EUR/USD currently changing hands around 1.1440. Stock markets are currently mixed. Sterling lost ground after this morning’s labour market report showed significant job cuts in May (-109k) with wage growth slower than feared. UK Gilt yields drop 8 to 9 bps across the curve with money markets now fully pricing two more BoE rate cuts this year. EUR/GBP rose from 0.8425 to 0.8470.

News & Views

The Hungarian Debt Agency AKK modified its 2025 financing plan. In line with the Economy Ministry increasing the expected 2025 cash-flow-based-budget deficit to HUF 4,774bn, AKK plans to cover the resulting HUF 651bn increase of funding needs for 2025 with FX bond issuance. The amended plan contemplates FX bond issuance in the amount of EUR 3bn which exceeds the additional financing need which will facilitate the accumulation of intra-year liquid reserves and enhance the flexibility of debt management. Timing, currency, and maturity of any issuance will be determined by ÁKK based on market conditions. FX bond issuance will also allow ÁKK to reduce slightly the net issuance target for the institutional HUF market by HUF 344bn. As a result of the new financing plan, the share of FX debt relative to total debt could reach 30% by the end of the year, but the FX share could fall back below the 30% benchmark limit following the end of the year.

Norwegian headline CPI inflation rose 0.4% M/M and 3% Y/Y (from 2.5% in April). Underlying inflation (CPI-ATE, excluding energy and adjusted for tax changes) eased to 0.2% M/M and 2.8% Y/Y (from 3% April). In its Q1 monetary policy report published end March, the Norges Bank (NB) projected headline and CPI-ATE inflation for May at respectively 2.7% Y/Y and 3.1% Y/Y. In a monthly perspective prices increased for food & drinks (2.8% M/M), clothing & footwear (0.9%) utilities (0.8%), communications (0.5%) and hotels, cafes and restaurants (0.6%). Prices of transportation (-0.9%) and some household goods (-0.8%) declined. The NB holds its policy rate unchanged at 4.5% since December 2023 and indicates that it will mostly likely be reduced in the course of 2025. However, the MPC said to give special attention to the rapid rise in prices for many goods (including food) and services as high business costs likely stoke inflation. The NB meets again on June 19 and has a new monetary policy report with forecasts available. It is most likely too early for the NB to ease policy next week. Markets see a first cut at the September meeting. The krone is holding little changed in the 11.51 area.